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January shaped up to be a rough month for out-of-work Americans looking to quickly land a job.
A slew of data releases this past week suggested that at the start of 2026, the job market remained stuck in a stubbornly frozen state at best — and flashed further signs of splintering at worst. January’s layoff plans were the worst for the month since 2009, while private employers added just 22,000 jobs, compared to the gain of 140,000 jobs during the same period a year ago.
Beyond the data points, recent weeks brought broad layoff announcements from Amazon, Pinterest, UPS, Home Depot, the Washington Post, and others. And the sector that dominated job growth last year — healthcare and social services — also appears to be slowing down with postings, according to Cory Stahle, an economist at the Indeed Hiring Lab.
“We can’t necessarily stay frozen like this for long. Either things are going to fall into a deeper freeze, or they’re going to have to start to thaw,” Stahle said. “If we look at the direction that all of the economic indicators are going, there’s definite, clear momentum for things freezing deeper, or things getting worse.”
To be sure, the belle of the labor market data ball — the monthly jobs report — has yet to appear. January’s unemployment rate and payroll growth statistics won’t be out until Wednesday morning after a brief delay caused by the partial government shutdown.
Do you have a story about navigating the job market? Reach out to Emma Ockerman here.
Economists expect payroll growth of 70,000, and the Chicago Fed estimates the unemployment rate declined slightly. The report will also include standard revisions to the Labor Department’s 2025 data, which are expected to show the economy added fewer jobs than initially reported. Federal Reserve Chair Jerome Powell has even suggested that payroll growth might have been negative by 20,000 jobs on a monthly basis since April.
The government’s final report on job openings for 2025 offered other signs of troubled waters: The economy logged 6.5 million jobs open at the end of December, far short of economists’ expectations and the lowest level since 2020. Even though more recent data on openings from hiring site Indeed suggests the situation didn’t get much worse in January, it’s nonetheless concerning that it hasn’t improved much either.
Read more: Worried about job security? Here’s how to protect your finances.
Meanwhile, the number of people filing initial claims for unemployment insurance increased more than expected in the last week of January, hitting 231,000 in a swing that was likely influenced by severe winter weather, as initial claims have otherwise been relatively low.
There’s some reason to believe that initial claims should be higher, said Michele Evermore, senior fellow at the National Academy of Social Insurance. In Minnesota, for example, claims dropped for much of January until slightly increasing last week, Evermore said. That’s in a state where recipients are typically better able to access benefits.
In states where it’s more difficult to apply, however, some eligible applicants may be shrugging off the perk because it’s too onerous or too small.
“We’re not getting a clear picture of the actual jobs market from the initial and continued claims because we’ve cut unemployment insurance to the point where it doesn’t matter anymore in some ways,” Evermore said.
Still, other data paints a picture of an economy that’s chugging along just fine. Real gross domestic product rose 4.4% on an annual pace in last year’s third quarter — the strongest growth in two years amid healthy consumer spending and exports, among other measures.
Federal Reserve Governor Lisa Cook noted that “the overall economy is solid” in a speech at the Economic Club of Miami on Wednesday — a common refrain among economists who point to a layoff rate near historically low levels, a generally low unemployment rate, strong economic growth, and resilient consumer spending. The economy may also need fewer jobs because of slower growth in the workforce.
Still, Cook also noted that “recent strong overall growth likely masks a challenging situation facing many families, particularly low- and moderate-income households,” which aligns with persistent reports of bad vibes percolating in American households. On the other hand, higher-income households seem to be doing well in what’s been called a “K-shaped economy.”
In the aftermath of the Great Recession, GDP growth also recovered at a quicker pace than jobs, Lisa Simon, chief economist at Revelio Labs, told Yahoo Finance — the same goes for the period after the dot-com bubble burst, which saw its own “jobless expansion.”
It’s also possible that AI and promises of productivity growth could keep propelling the economy forward more broadly, Stahle said.
“If you’re not looking so much at GDP and the stock market right now and you’re focusing just on the labor market, it definitely seems like the momentum is skewed toward more risks of a downturn at the moment,” Stahle said.
Emma Ockerman is a reporter covering the economy and labor for Yahoo Finance. You can reach her at emma.ockerman@yahooinc.com.
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